Chancellor of the Exchequer Rishi Sunak set out in a speech on Thursday a financial support scheme for the UK’s self-employed workers and those in business partnerships.
He said the scheme, administered by the UK’s tax authority HMRC, would cover 95% of self-employed workers. It offers support similar to that announced on 20 March for employees in the UK.
Under the new scheme for self-employed workers, those “adversely affected by the coronavirus” could apply for a “taxable grant worth 80% of their average monthly profits over the last three years, up to £2,500 a month”, Sunak said.
He explained the scheme would be open for at least three months — longer if necessary — and that the funds would be accessible from the beginning of June at the latest. “[The self-employed] will be able to claim these grants and continue to do business,” he added.
The scheme is open to those workers who:
- Have incomes up to £50,000.
- Make the majority of their income from self-employment.
- Are already in self-employment and who have a tax return for 2019.
HMRC set out guidance on the scheme and will contact those eligible and invite them to apply online.
Sunak said that, additionally, self-employed workers’ self-assessment income tax payments, which were due in July 2020, can be deferred to the end of January next year and that the self-employed would be able to access Coronavirus Business Interruption Loans.
Dame Carolyn Fairbairn, director-general of the Confederation of British Industry (CBI), which represents 190,000 UK businesses, said in a press statement that given the administrative complexity of the scheme, “it’s understandable this will take time to deliver”. She added: “Fast clarity on how and when money will reach their bank accounts will help individuals to plan.”
Sunak also described how the support package for business announced on 20 March is working. He said there had been 30,000 enquiries in four days about the Coronavirus Business Interruption Loans of up to £5 million for small businesses, and local authorities were informing more than 700,000 retail, hospitality, and leisure businesses that they will not pay the local business rates this year.
He added: “The new hardship grants scheme, providing cash grants of up to £25,000 for the smallest businesses, is now up and running.”
Sunak in his speech also hinted at reviewing in the future the tax arrangements for the self-employed. He said that in devising the scheme for the self-employed, “it is now much harder to justify the inconsistent contributions between people of different employment statuses”. He added: “If we all want to benefit equally from state support, we must all pay in equally in future.”
For more news and reporting on the coronavirus and how management accountants can handle challenges related to the outbreak, visit FM’s coronavirus resources page.
— Oliver Rowe (Oliver.Rowe@aicpa-cima.com) is an FM magazine senior editor.